Dreaming of a simple and cost-efficient transition to get to SAP S/4HANA: A realistic assessment

The question of an uncomplicated and cost-effective transition to SAP S/4HANA is a recurring theme. Service providers like to use it as a hook, and it naturally sounds tempting for companies that are about to undergo this transformation. But experience shows that the devil often lies in the details and blanket promises rarely do justice to the complex reality.

Many companies shy away from taking the step towards SAP S/4HANA because of the feared complexity and the painful experiences with previous migration projects, which were often associated with a lot of effort, frustration and unplanned costs. There is therefore a great desire for a smooth transition that primarily focuses on the advantages of the new system.

For this reason, it is essential to deal with the considerations below right at the beginning of the project or during the conception phase intensively.

Transferring as little data as possible is the key to simplification

SAP S/4HANA was designed to simplify SAP ERP, promote innovation and increase user experience. Leaner data models and comprehensive standard processes for various industries are at the core of this vision. To make optimal use of these advantages, the “new implementation” or “selective data transfer” approach comes into focus. This makes it possible to design an optimized system landscape from the ground up that is adapted to the SAP S/4HANA logic.

In contrast to the classic “conversion” approach, in which the existing SAP ERP system with its often historically grown structures, individualizations and the entire database is transferred to SAP S/4HANA, a simplification relies on the transfer of less data. This means that even with a “conversion”, which is the more cost-effective approach for many companies, data can be archived/historized in advance and thus drastically reduce the amount of data to be transferred.

Data migration: Less is significantly more

A central aspect of cost optimization and simplification is the transfer of as little data as possible. Transferring large amounts of data from the legacy system is often a time- and resource-intensive process. In addition to the pure migration effort, this requires extensive data cleansing activities and the consideration of old data structures in the new system. This complexity runs counter to the actual objective of SAP S/4HANA – simplification – and inevitably leads to additional cost.

A pragmatic approach is to focus on the business-critical data when migrating. This includes, for example, master data (e.g. customers, suppliers, materials), open items (e.g. debtors, creditors) and the balances/transactions of the last 1.5 to 2 years. This data is usually sufficient to continue business operations seamlessly in the new environment and to keep the initial effort manageable.

The critical questioning of individual developments

Many older SAP ERP systems (such as ECC 6.0) are highly customized and contain numerous in-house developments (Z programs). As part of an SAP S/4HANA migration, the question inevitably arises as to whether those are necessary. There is often a lack of up-to-date documentation or knowledge of how these programs are used. However, experience shows that a significant proportion of these developments are hardly used anymore, or their functionality is now covered by SAP S/4HANA standard functions.

The simple motto “Less is more” applies. A critical analysis of the existing customization and the consistent reduction to necessary adjustments lead to a leaner, easier to maintain and more cost-effective SAP S/4HANA system.

SAP RISE: Intelligent resource planning to control cost

In the context of SAP RISE, a comprehensive offer for the SAP S/4HANA transition into the cloud, there is a risk of initially buying a larger service package than is needed. The contract terms generally do not provide for a reduction of the volume bought during the contract term. Therefore, it is advisable to follow the principle of minimal configuration and starting with a basic package. Additional resources (e.g. memory, computing power) can be flexibly ordered if required. This approach ensures greater cost control and avoids unnecessary expenses.

A cost comparison between storage in SAP S/4HANA (according to the current price list) and a dedicated archiving or historization solution impressively demonstrates the financial savings potential. For example, while 256 GB of additional storage in SAP S/4HANA (beyond the volume included with the initial licenses and for 3 environments) costs 8,693 euros per month, the same storage capacity is already available in archiving/historization solutions for around 256 euros per month. This highlights the need to keep the amount of data in the SAP S/4HANA system as low as possible to avoid significant cost.

Decommissioning of the legacy system: reduce costs and minimize risks

After the successful migration and go-live of SAP S/4HANA, the question arises on what to do with the legacy system. Simple shutdown without data access is not in line with compliance and reporting reasons/needs.

The elegant solution is to archive or historize the old data in a separate archive/historization system. This system should not only keep the data safe but also provide a user-friendly interface for logical data retrieval. This means the historical data remains fully accessible when needed, without having to continue operating the old ERP system. Shutting down the old application leads to significant cost savings (e.g. for maintenance, infrastructure), reduces risks related to the data availability of the outdated system and protects both environmental resources (e.g. energy consumption) and human resources.

Taking this approach into account early in the planning enables minimal/selective data migration. Since the historical data is still available, it can be loaded into the new system later if necessary.

Securing know-how: Coding available in the future

To remain flexible in the long term, it is recommended to save the source code of the most important individual developments (Z programs) separately. On the one hand, this ensures that individual functions could be recreated in the historization tool for retrieval purposes if necessary. On the other hand, this code base serves as a valuable basis if it turns out over time that certain functionalities are required again in the new environment and need to be redeveloped.

Conclusion: A pragmatic path to S/4HANA

In summary, a simple and cost-effective switch to SAP S/4HANA is possible through a consistent reduction in the amount of data to be transferred, a critical review of customizing and an intelligent use of resources. This pragmatic approach requires the courage to simplify and the willingness to get rid of inefficient processes and unnecessary legacy burdens. However, the potential benefits - reduced migration cost, optimized SAP S/4HANA operating cost and minimized risks - clearly outweigh any doubts and enable companies to use the innovative power of SAP S/4HANA quickly and efficiently.